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America's population is wealthier than any in history. Every year, the American government redistributes more than a trillion dollars of that wealth to provide for retirement, health care, and the alleviation of poverty. We still have millions of people without comfortable retirements, without adequate health care, and living in poverty. Only a government can spend so much money so ineffectually. The solution is to give the money to the people. This is the Plan, a radical new approach to social policy that defies any partisan label. Murray suggests eliminating all welfare transfer programs at the federal, state, and local levels and substituting an annual $10,000 cash grant to everyone age twenty-one or older. In Our Hands describes the financial feasibility of the Plan and its effects on retirement, health care, poverty, marriage and family, work, neighborhoods and civil society.

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Charles Murray is well known author of popular yet controversial social science books (see for instance Losing Ground: American Social Policy, 1950-1980, 10th Anniversary Edition, Bell Curve: Intelligence and Class Structure in American Life (A Free Press Paperbacks Book), Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950 ). He is an engaging writer and all of his books are replete with hard data and precise quantitative analysis. A large deal of what makes his ideas so controversial is the fact that they are backed precisely with this kind of objective and precise analysis, that often flies in the face of common wisdom of the times. This book too, although much slimmer and less exhaustive than the abovementioned ones, falls in that category. It's premise is simple: abolish all social wealth redistribution programs and in their place institute an annual allowance of $10,000 for all US citizens 21 and older who make less than $25,000 annually. This in fact would be a Negative Income Tax (NIT), something that has been proposed by many economists over the years. The proposal is rooted in Murray's newfound acceptance of the fact that a full-blown abandonment of all social programs is politically completely unfeasible, and his desire to make an alternative wealth redistribution scheme that would minimize many social ills that such schemes usually bring along.

Most of this book is dedicated to arguments that explore the feasibility of this new scheme, as well as providing the theoretical evidence that the scheme would in fact bring the desired outcomes. The biggest underlying assumption is that the US economy is finally large and strong enough to actually implement this plan.Read more ›

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A wonderful debate on a Plan to make us all more free while ending PovertyMarch 31 2006

By
Craig Matteson
- Published on Amazon.com

Format: Hardcover

It is not possible to get a fair picture of Charles Murray or his writings from the popular media. His thinking is so interesting and refreshing that establishment types dismiss his ideas out of hand and mischaracterize even the nature of his discussions. They then resort to endless personal attacks through unfair and unjustified smear, innuendo, and even childish ridicule. We are all done a disservice when we are not allowed to hear Charles Murray's voice. He is an original thinker who is brave enough to say some very interesting things that we would all be better off actually discussing and considering. Even if we end up not agreeing with him, which is always fair AFTER study and debate, we will be better off by becoming clearer about what it is we do believe.

This terrific book is a brief discussion of what Murray calls "The Plan" (for lack of a better term) that would actually end poverty as we know it, make everyone more free and end dependence on politicians and bureaucrats for so much of our lives. Of course, this means that anyone who benefits from things as they are is going to instantly attack this book or ignore it and hope it just goes away. I hope for just the opposite. I hope there is a big debate and the real motives and power seeking of the establishment goes on display.

The Plan is quite simple. Everyone over the age of 21 - regardless of status - who has a bank account gets $10,000 per year paid monthly. Once your income reaches and passes $25,000 per year your payment begins to get taxes until your reach $50,000 where you end up with only $5,000 that year. That is really it. In return, ALL transfer programs are ended. This means no agricultural supports, no Medicare or Medicaid, no social security, and so on. He spends a few chapters discussing the reasons why this is a better deal for almost everyone (single women who don't work but have kids on a regular basis will be worse off because they will end up with less income per mouth to feed).

The most interesting chapters for me were those that discuss the increase in freedom and the wonderful social implications it would mean for everyone in our society to be more enabled to take their life more fully in their own hands. People would be freer to live as they saw fit, not as someone else thinks they should. They wouldn't have to jump through hoops to qualify for this or that credit or payment. Just reading Murray's discussion reminds us about what the idea of freedom is fundamentally about.

Of course, there are things that critics can pick at. For example, I saw no discussion of the effects of inflation on the $10,000 payment. Was an increase in the payment for inflation included in his costs? If not, the payment will shrink in real terms quite substantially. Maybe this is part of his plan for true Libertarian freedom. When the time arrives when the $10,000 payment is all but meaningless, it can simply be stopped and we will all be free to live as we choose.

Murray does discuss the indigent, and effects such payment would have on the incentives for work. Again, you can debate his points. However, at least consider them and debate them. Simply not listening makes us all worse off.

What an intriguing book. As an Independent with a strong disdain for partisan ideology...for the sake of partisan ideology, I found Murray's ideas both thought provoking, encouraging and attractive to all voting blocs. I have a mixed voting history that leans slightly Democratic and the premise Murray puts forth buoyed all my varying sensibilities from libertarian to conservative to liberal to populist to free capitalist to humanist to idealist to pragmatist.

"The Plan" is simple. Everyone at the age of 21 receives $10,000 (tagged for inflation) per annum for life. No changes for marital status or any other demographic tag. Erring on the high side, this program will, at the most, cost about $1.73 trillion to start and, according to demographics, will descrease over time in equal-valued dollars. This replaces all entitlement spending at all levels of government which Murray states in 2002 totaled almost 1.4 trillion dollars. This includes business and agricultural subsidies and means tested programs for the poor. According to Murray, "The Plan" will effectively eliminate involuntary poverty.

Seems radical but it isn't. It makes more sense than other policy innovation I've ever heard of. The liberal skeptic needs to consider how much we spend on social assistance and take a sobering look at how far the battle over poverty is from being won. This plan gives every American, regardless of circumstances, the financial base to escape poverty. Failure is in "our hands". Virtually every extreme circumstance one can imagine is countered by "the plan". For the average and below average american it is a base to build from and protect oneself.

The conservative skeptic needs to see how much we spend and what it does and doesn't do. The funding of this program, erring on the high side, will be less expensive than the current system in a few short years...maybe sooner. By 2020, Murray estimates "The Plan" will cost over $500 Billion less annually than the current system. How's that for savings?

Some practical details: Murray also proposes smart healthcare reforms that will bring down the cost of healthcare. He estimates an annual premium cost per person of $3000 per year. The other $7000 per year is for the person to use to provide one's saftey net. He also suggests $2000 per year go into conservative retirement savings. It's important to note that $7000 after health insurance is the more important stat to Murray. If healthcare cannot be done for less than $3000, he demands increasing the 10,000 to a suitable number. At an anemic 4% annual growth over one's working life(unheard in America history except for someone who started working during the crisis of 1887 and retired at the Great Depression, in which case the return would have been 4%!) it gives a total of about $245,000, which in the form of an annuity will give a yearly income of about $20-24000 and you STILL get the $10,000! Double for an elderly COUPLE of limited means and you get a retirement income of at least $60,000 GUARANTEED. What government program can do that?! Save more, retire sooner!

Other important details: at 50,000 in income, you give back half the grant. Also keep in mind that all those FICA and Medicare withholding taxes are eliminated from payrolls...the most regressive wage taxes of them all. Plus, the lowered cost of employing people by eliminating these payroll taxes will lead to increasd payrolls.

People earn more, save more, retire better and when they want and the government averts fiscal crisis. Involuntary poverty is easily averted for virtually everyone. Some may argue that that is impossible. Maybe it is. But it is much easier to avoid poverty this way then by relying on the current system. Some people will always doom themselves to life of voluntary squalor...just like they do now. With the Plan, a minimum wage part-time job is all you need.

Murray leaves the details to the politicans. But he has painted the broad strokes of the idea so in can flourish into an intelligent national debate. The book is a quick, easy read. Read it, talk about it and pass it on.

This could be one of the influential policy innovations of our life time. It only needs the attention to give it its due scrutiny, which I'm sure it will pass.

56 of 64 people found the following review helpful

Intriguing premise, but the devil is in the detailsApril 3 2006

By
BRIAN CADENA
- Published on Amazon.com

Format: Hardcover

I'm a graduate student in economics, writing my dissertation on economic issues and policies related to the poor. I've read through the book, and while I find the idea compelling, there are some problems I can't get past.

Critiques of the finances

1. Murray is fairly careful to outline who the winners and the losers are in this plan. But in doing so, he ignores the transition, especially with older people. As I understand it, if we implemented "the Plan" tomorrow, retirees who had previously had Medicare and Social Security benefits would now get $10,000 and be forced to buy into the health insurance plan, leaving them with at most $7,000 per year. This new benefit level would represent a severe decrease for a significant fraction of the elderly, and for single retirees, it would not be sufficient to allow them to live above poverty. It is certainly true that a 21 year old might be able to save more over his lifetime and do better under "the Plan" than under the current social security system, but we wouldn't realize those benefits for 40 years. The pain of newly impoverished retirees would be immediate. In fact, it seems to me that the reason "the Plan" becomes more affordable than the current system in a few years is that baby boomers (to whom we currently owe Medicare and social security) would start receiving incredibly reduced benefit levels. If I understand the proposal correctly, this seems like a glaring omission from Murray's analysis of winners and losers. I found a little discussion of this buried in Appendix D, but there's never a direct comparison of someone already now retired under the current system and under "the Plan".

2. Another somewhat misleading piece of analysis is when Murray discusses how a 21-year old making $20,000 each year will save for his retirement. Murray suggests that by putting $2,000 of his grant into a retirement plan, he can end up with an annuity that is far better than what he would have earned through social security. While this is likely true, it ignores another hidden detail. In order to make "the Plan" financially feasible, Murray has held government revenues constant, including taxes entering the system through the payroll tax. If we assume for the sake of argument that all government revenues are being collected from the same people in the same amounts, then this 21 year old worker is simply robbing Peter to pay Paul. He sends the government $2000 in payroll taxes, which they then send back to him to put away for his retirement. His only gain is that his private account can do better than social security. While this is potentially a meaningful gain, the discussion in the book makes it sound as if he gets out of paying payroll taxes and also gets money to put into retirement. Again, this is a significant omission from the discussion.

3. Another smaller critique is with his elimination of the student loans program. First, the direct student loan program actually represents a net positive flow of income into the government. This happens because the interest rates on the loans are higher than the discount rate used to discount future income. Eliminating the program, therefore, should be a net decrease if the accounting is properly done. Second, it's exceptionally misleading to say that we'll stop lending out money, but then to assume that government revenue will continue to follow current projections. If no one is able to borrow, then no one will pay the money back. Here, the relevant amount of money to add to the pot to pay for the plan is outlays minus the present value of expected future repayment, which is negative.

Other Comments

1. The basic structure seems sound to me. I like that the benefits are not taxed away until $25,000, and it seems that under this setup work disincentives will indeed be less than under the NIT experiments. In particular, I like that there is no (additional) distortion to labor supply at the extensive margin (choosing whether to work at all). The Plan would eliminate the EITC, however, which in theory provides an incentive to earn an initial amount of money. The evidence, though, suggests that it mainly acts as a one-time subsidy payment to workers who don't really understand how it works; so this isn't that big of a concern to me.

2. I like that child support payments are easily enforceable. Now the financial burden of childbearing is equally shared between father and mother whether or not they continue in a relationship, at least up to $7000 each year per father. What I don't understand then, is how Murray can claim that "the Plan" eliminates any financial gain to a young woman considering bearing a child. Certainly for mothers less than 21, they have lost the ability to get food stamps and TANF monies, but for women over 21, having a child and proving paternity is now worth a big chunk of the father's grant. If she's concerned that he's not pulling his weight, she can have a child, and ensure that he will continue to support her and the baby regardless of whether the relationship continues.

3. Everyone gets a bank account. This is good news as bank accounts lower transaction costs and can provide a good deal of financial security, except that now bank accounts are worth $800/month to everyone, and demand for them becomes relatively inelastic, allowing banks to lower interest rates on savings accounts and to increase fees and surcharges for account holders.

4. Immigrants. There is no provision for immigrants, legal or illegal, to receive any benefits until they become citizens. While I understand that we can't simply let people come to the country to get a free $10,000 each year, this seems particularly harsh and opposed the vision of this country. I'd like to see some sort of graduated benefit level based on length of residence or amount of income taxes paid, etc.

8 of 8 people found the following review helpful

"The welfare state drains too much of the life from life."Oct. 26 2006

By
brian komyathy
- Published on Amazon.com

Format: Hardcover

"America's population is wealthier than any in history. Every year, the American government redistributes more than a trillion dollars of wealth to provide for retirement, health care, and the alleviation of poverty. We still have millions of people without comfortable retirements, without adequate health care, and living in poverty. Only a government can spend so much money so ineffectually." From the War on Poverty, on, however, too many still think we can finally succeed...if only the problem is bombarded with yet more cash. Charles Murray disagrees. "The problem," says he, "is that we are spending the money badly." The "limited competence of government---not our government in particular, or the welfare state in particular, but any government" is the problem. Government, by its inherent nature, Murray posits, is simply "far out of its depth" when it "begins trying to administer to complex human needs." Mr Murray offers a Plan herein, picking up on the notion that, in the War on Poverty, Poverty has won (as a former president has opined). But poverty can be alleviated, and the other failings enumerated above improved on, according to Mr. Murray, if we nuetralize what's called "moral hazzard" by economists. "People who are in need through no fault of their own can be given generous assistance with no downside risk. But people who are in need at least partly because of their own behavior pose a problem: How to relieve their distress without making it more likely that they will continue to behave in the ways that brought on their difficulties, and without sending the wrong signal to other people who might be tempted. Bureaucracies have no answer to this dilemma." "They cannot provide help to people who have behaved irresponsibly in a way that does not make it easier for others to behave irresponsibly."

So, what's the solution? No, not endless cascades of funding. "The solution," in Mr. Murray's view, "is to give the money [now allocated by government on a slew of programs---give it, instead, directly] to the people." Consider this: As of 2002, the American federal government spent "about $6,900 for every man and woman in the United States age twenty-one and older" to fund workers' compensation programs, social security, medicare, medicaid, welfare transfers, and assorted smaller transfer programs of a nature similar to these aforementioned. In lieu of such Mr. Murray suggests that, instead, government "shall make no law nor establish any program that provides benefits to some citizens but not to others. All programs currently providing such benefits are to be terminated. The funds formerly allocated to them are to be used instead to provide every citizen with a cash grant beginning at age twenty-one and continuing until death." At the outset he proposes this sum to be $10,000. Think about it for a minute. As it would be indexed to cost of living increases, everyone would be assured of a bare minimum of retirement and access to health care (since everyone could purchase their own insurance out of the 10 grand annually. (Donald Trump, you say, needs another $10,000 a year? No, Mr. Murray's plan does progressively tax the individual $10,000 credit as one's income rises, but interestingly, will revert back to its full value should a high-earning person go bankrupt or something.) With such a guaranteed income, unemployment benefits, food stamps, and welfare transfers would be superflous. Nobody would be without the wherewithall to provide for their own basic necessities. How many teen moms, for instance, would risk a pregnancy, or at least a second pregnancy if they weren't going to get any government support should they do so? In a similar vein, the "current decline in marriage," Mr. Murray argues herein, "is not a function of modernity, but of the welfare state."

The central point of the Plan, thus, is make people more individually responsible. "Under the Plan, people have ample raw materials for a [safety] net, but they must weave it for themselves." In short, the welfare state as a notion simply "drains too much of the life from life,"''exacerbat[ing] the very problems it is supposed to solve." Mr. Murray offers the example of Europe in this regard. The European ideal, he suggests, "is an ideal only for a particular way of looking at life. It accepts that the purpose of life is to while away the time as pleasantly as possible, and the purpose of government to enable people to do so with as little effort as possible." Hence in Europe fertitlity rates are below replacement levels, entrepreneural spirit lacking, voluntary associations scarce, and the notion of charity is a notion for government to alleviate with rich folks money. (Americans as individuals, by far, are more generous with their money than any other people in the world, for instance.) "Europe's former scientific preeminence has vanished." It no longer has "the political will to defend itself;" "a continent with neither dreams of greatness nor the means to reacquire greatness." "The real purpose of the Plan," the author concludes, "is the revitalization of the institutions that enable us to lead satisfying lives." "Happiness consists of something more than feeling good." "A person permanently high on drugs cannot be happy. A selfish or cruel person cannot be happy." There's a reason, is there not, why Americans are more inclined to feel proud of their identity than Europeans; why Americans volunteer their time; why they are far more charitable, embrace community through membership in assorted associations and/or religious houses of worship; who work hard...and are proud of it; and who, generally speaking, recognize a higher being & think we are on this planet to do some good while we are here rather than to while away the time with our feet up sipping wine. The welfare state machinery in Europe has certainly encouraged negative behavior...and has already done too much damage in the USA, in Mr. Murray's opinion. This well argued and concise book (the heart of which is only 127 pages in lenth) suggests how we may reverse what societal negativity we have unconsciously wrought; or, at a minimum, to encourage introspection and debate. It's just one man's view, but it's certainly a thinking-person's book, worth contemplating. (06Oct) Cheers

21 of 25 people found the following review helpful

Too bad it will never happenApril 4 2006

By
Mark Wilsonwood
- Published on Amazon.com

Format: Hardcover

I'm not as economically savvy as the previous reviewer, so I'm not qualified to critique the details of Murray's plan. But this book represents "big thinking" -- the only kind of thinking that can solve the big problems we face. I'm grateful to Murray for producing this book. But I am a pessimist, or perhaps "realist" would be a better term. If Murray's plan -- or anything remotely resembling it -- is ever floated before the general public, it will be doomed, doomed, doomed. Politicians who recognize that their political power would vanish along with the welfare state would go into full Demagogic Fear-Monger mode, screaming that the plan would only benefit rich white males while pushing women, minorities, and children into poverty and insecurity. Enough voters would buy into that hysteria to keep this plan from ever seeing the light of day. And thus we will spiral farther down towards socialism.